Greens seek return to tougher mining tax

The federal government is under pressure from the Greens to increase the minerals resource rent tax in the face of continuing opposition to the levy from some resource companies.

The Greens will use advice from the Organisation for Economic Co-operation and Development to push for the tax to be raised to 40 per cent and extended to commodities other than coal and ore.

But Resources Minister
Martin Ferguson
said yesterday the government would not change the fundamentals of the pre-election tax deal struck with the three big miners – BHP Billiton, Rio Tinto and Xstrata.

OneSteel
chairman
Peter Smedley
told shareholders yesterday that, while the MRRT was an improvement on the resource super profits tax, the company could not support it because it would have a “significant adverse impact on both our iron ore export business and the Whyalla steelworks".

He said OneSteel had told the government’s Policy Transition Group that the tax threatened the viability of the steelworks.

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Greens leader
Bob Brown
said he would negotiate with the government to revert to the tougher tax model proposed by the Henry tax review.

His comments followed the Paris-based OECD’s latest report card on Australia’s economy and policies, which recommends the tax be applied across all commodities, the rate be increased from 22.5 per cent and state royalties be axed.

A bill on the tax is to be introduced in Parliament next year, with draft legislation released in May.

Senator Brown, whose party will hold the balance of power in the Senate from July, said: “We will now be armed with the OECD report in negotiations with the Treasurer and the government leading to their legislation on the minerals tax next year, to try to get them to go back to the prescription from Treasury and the Rudd government to have a 40 per cent level of taxation – but also to put it into a sovereign fund for the nation’s future, for things like high-speed rail, the rollout of increased funding for education and health."

The original tax, a 40 per cent rate on all non-renewable resources, was watered down by Julia Gillard in July to an effective rate of 22.5 per cent, applying only to coal and iron ore.

Senator Brown’s comments yesterday were his strongest yet on the Greens’ determination to beef up the tax, although he has said the Greens will not block the legislation.

Mr Ferguson told Parliament that the tax deal with the big miners had created certainty for the resources sector, which had resulted in a number of large investment decisions being announced, and the government had “no intention" of changing the tax.